Suspension of Night Session for Gold Contracts (Standard, Mini and Options) on November 27, 2009

11.30.2009

 

On Friday November 27, 2009 at 4:53 p.m., Tokyo Commodity Exchange, Inc. ("TOCOM" or the "Exchange") experienced a technical problem. This led to the suspension of the night session for gold contracts (standard, mini and options) at 5:10 p.m. We sincerely apologize for the inconvenience caused to market participants and concerned parties.

After identifying and resolving the problem between November 28 and 29, regularly scheduled trading resumed with the November 30 day session. Below are the details outlining the timing and cause of the outage, as well as measures taken to resolve the outage (as announced on November 30), and measures to prevent future occurrences.

 

1. Technical Problem and Suspension of Trading Session (November 27)

16:53 NTT DATA, the operating for TOCOM’s trading system, discovered a software error in the system server (primary server) for the precious metals market and a price quoting error for the Gold October 2010 contract.
16:55- 57 TOCOM received notification from NTT DATA regarding the errors.
16:57 NTT DATA informed TOCOM that fail-over had occurred, automatically switching from the primary to the backup server.
16:59 TOCOM confirmed the price quoting error in the Gold October 2010 contract.
17:00 Circuit Breakers (CB) were triggered in the gold standard and platinum standard contracts immediately after the opening auction. After a 5 minutes suspension, markets moved to the continuous trading session (“Zaraba”).
17:05 TOCOM confirmed that the best bid price was not updating on Gold October 2010 contract (JPY 3,205).
17:08 TOCOM notified members, etc. of the suspension of gold contracts from 17:10. (17:18 Posted the same announcement on the TOCOM Website.)
17:10 TOCOM suspended the gold standard and related contracts, gold mini and gold options contracts, based on the Contingency Plan (CP).
17:47 TOCOM notified members, etc. that the cause of the problem was under investigation
18:16

TOCOM notified members, etc. of the suspension of the night session for gold contracts (standard, mini, and options). (18:20 - Posted the same announcement on the TOCOM Website.)

 

2. Cause of the Problem
The Exchange investigated and identified the problem source to be two defects (bugs) in the NASDAQ OMX software.

(1) Cause of the Fail-over
During the order acceptance period, an error occurred in the indicative price calculation process, which calculates the price at which a maximum number of orders can be executed. After each calculation, the system failed to clear cached memory, causing a memory shortage that prevented the system from calculating prices.  

(2) Cause of Price Quoting Error
In the fail-over process, an error occurred with the transfer of data, etc. to the secondary server.

3. Measures taken to Avoid Reoccurrence
Having identified the cause, NASDAQ OMX corrected the software errors. Between November 28 and 29, TOCOM and NTT DATA confirmed resolution of the problem through replication testing (replicating the original circumstances) and verification testing (confirming that similar errors do not occur post-patch implementation).

4. Request for Reports from Ministry of Economy, Trade and Industry (METI)
Having received a request from METI on November 27, TOCOM plans to submit reports on this matter on November 30 and December 2.

TOCOM would once again like to express its deepest apologies to everyone involved for the inconvenience caused by the outage. TOCOM deeply regrets the problem and will continue to work to ensure the proper operation of the market, which includes taking preventative measures to avoid similar outages. As we move forward with these efforts, we would highly appreciate your understanding and cooperation.

 

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